EUR/GBP rises to its highest level since late May, above 0.8650

The EUR/GBP pair rose to a high since May 31 of 0.8658 and then closed at 0.8636.
Christine Lagarde delivered hawkish comments stating a hike by the ECB in July is likely.
Falling British yields weight on the GBP.

Patricio Martín FXStreet

The EUR/GBP currency pair has surged to its highest level since May 31, reaching 0.8658 before retracing slightly to 0.8635. This upward movement was primarily influenced by Christine Lagarde's hawkish comments, in which she confirmed the likelihood of an interest rate hike by the European Central Bank (ECB) in July and dismissed the possibility of a pause. Simultaneously, the GBP experienced weakness due to declining British yields.

The Sterling Pound loses interest on recession fears in the UK

The GBP came under pressure as falling British yields weighed on the currency. The 2-year, 5-year, and 10-year bond yields experienced declines of over 1%, contributing to the weakening of the pound against its major counterparts. In that sense, falling yields signal major bond demand and a negative market expectation towards the British economy, applying selling pressure on the Sterling.

Christine Lagarde's statements on Wednesday during the ECB forum in Sintra indicated a strong likelihood of an interest rate hike in July if the prevailing conditions remain consistent. She made it clear that she does not foresee a pause in monetary policy adjustments in the foreseeable future, and her hawkish stance gives the Euro a boost against the Sterling.

Attention now turns to confidence data figures from the Eurozone and the German Consumer Price Index (CPI) preliminary readings on Thursday. In addition, Gross Domestic Product (GDP) and Personal Consumer Expenditures (PCE) data from the US from Q1 will also impact market dynamics.

EUR/GBP Levels to watch

According to the daily chart, the outlook favours the Euro over the GBP. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) show strong bullish momentum. However, the 100 and 200-day Simple Moving Averages (SMA) are about to perform a bearish cross, which could limit the upside potential.

Resistance Levels to watch: 0.8658 (daily high), 0.8670, 0.8695.
Support Levels to watch: 0.8600, 20-day SMA at 0.8633, 0.8645.

EUR/GBP Daily chart

EUR/GBP

Overview
Today last price	0.8635
Today Daily Change	0.0038
Today Daily Change %	0.44
Today daily open	0.8597

Trends
Daily SMA20	0.8579
Daily SMA50	0.8676
Daily SMA100	0.8749
Daily SMA200	0.8748

Levels
Previous Daily High	0.8613
Previous Daily Low	0.8568
Previous Weekly High	0.8636
Previous Weekly Low	0.8518
Previous Monthly High	0.8835
Previous Monthly Low	0.8583
Daily Fibonacci 38.2%	0.8596
Daily Fibonacci 61.8%	0.8585
Daily Pivot Point S1	0.8572
Daily Pivot Point S2	0.8547
Daily Pivot Point S3	0.8527
Daily Pivot Point R1	0.8618
Daily Pivot Point R2	0.8638
Daily Pivot Point R3	0.8663

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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